Beta Bionics

Building a bionic pancreas to improve the lives of people with type 1 diabetes

Beta Bionics

Building a bionic pancreas to improve the lives of people with type 1 diabetes

At Beta Bionics, Inc., we have developed a bionic pancreas called the iLet™, a pocket-sized, wearable medical device that autonomously manages blood sugar levels in people with diabetes. Our iLet technology has demonstrated dramatic improvements in clinical outcomes. Through its ability to continuously adapt to the ever-changing insulin needs of people with diabetes, the iLet is the quintessential embodiment of personalized medicine – a sturdy and irrevocable bridge to the ever-elusive cure.

Why people love us

The senior author, Edward R. Damiano, an associate professor of biomechanical engineering at Boston University, has a 15-year-old son with Type 1 diabetes. He said he was determined to get the new device working and approved in time for his son to go off to college carrying one.

The New York Times

Recently, Beta Bionics secured $5 million from the pharmaceutical company Eli Lilly, which manufactures the insulin used in the device.

In the news

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Our Children have Type 1 Diabetes

Our children were diagnosed with type 1 diabetes at an early age. For over ten years we’ve worked tirelessly to improve their lives - to ensure them the same freedom that every child deserves. Beta Bionics is really just the result of parents fighting for the well-being of their kids.

See the Reality

"Sometimes it's hard and not fair. I just don't like diabetes." — Elise Cunha, type 1 diabetes since age one

Elise had just celebrated her first birthday when she was diagnosed with type 1 diabetes. In 2014, Elise participated in a clinical trial testing the bionic pancreas. It automatically gave her insulin to prevent her blood sugar from going too high and glucagon to prevent it from going too low, so Elise didn't have to worry about it. Instead, she could do what six-year-olds do best: have fun.

Solution: The Bionic Pancreas

Automatically curtails low blood sugar levels in everyone to levels that would likely eliminate severe hypoglycemia in people with type 1 diabetes.

Automates blood sugar control for everyone, thus unburdening people with type 1 diabetes of the relentless need to comply with therapy.

Unburdens people with type 1 diabetes and their families of the constant fear of hypoglycemia, and of the worry and dread of long-term complications.

Freeing Kids from Diabetes

"If I'm out playing at school, my levels tend to go low. But if I have the bionic pancreas, it'll treat me so I can keep playing." — Mikayla Cappabianca, Clara Barton Camp

Over Ten Years in the Making. We're Close.

Letter from Ed Damiano to Potential Investors

"We are calling all like-minded individuals – people with “skin in the game” as we like to say – to join our cause and invest in the future of Beta Bionics. The amount of your investment is immaterial; the conviction of it is everything." — Ed Damiano, CEO Beta Bionics

May 15, 2016

As I write this letter to you, I am reminded that on this very weekend, 16 years ago, my
wife, Toby – then a practicing pediatrician for only a year – diagnosed our infant son,
David, with type 1 diabetes. David will turn 17 years old this week; and in about a year
from now, he will head off to college and venture into the world as a young adult. As he
makes that transition, and takes on all that goes along with it, the full burden of type 1
diabetes will also fall squarely on his shoulders. It was with this singular occasion in
mind – a moment that has weighed heavily on me for the past 16 years – that I resolved
to build technology that would step in and do for David what Toby and I will no longer
be able to do for him after he leaves our care: to manage his diabetes, day and night, and
keep him safe from the far-reaching harms, the immediate dangers, the emotional burden,
and the fear that type 1 diabetes carries with it for everyone it targets.

We have not set out to cure type 1 diabetes; we are not the ones to do that great work.
Instead, we have set upon a course to build a bridge to a cure – a sturdy and irrevocable
bridge to the ever-elusive cure. With the recent incorporation of Beta Bionics, and this
public offering, we have reached a watershed moment in the very long and extraordinary
path we have forged to bring the bionic pancreas to my son, and to as many people as we
can, with type 1 diabetes. From our early animal studies, to our inpatient and outpatient
studies with our clinical collaborators at home and at summer camp, to the creation of the
iLet – every mile of this journey, every facet of this endeavor, has been unconventional.
And so too has been our approach to the very business model that we have prescribed for
Beta Bionics. As a public benefit corporation – perhaps the first of its kind in the
medical device industry – we have built an organization around the uncommon principle
that our company is, first and foremost, dedicated to acting in the best possible interest of
the T1D community. This means that every board decision, and every management
action, is made with this commitment as our guiding principle. As a benefit corporation,
we are obliged to do this, and we are protected under Massachusetts law to execute our
business model to meet that obligation – even if those decisions and those actions
sometimes supersede opportunities to return equity to shareholders. Of course we believe
that such a commitment, coupled with effective execution, will necessarily and naturally
lead to the best medical technology platform that the modern world can offer – to a
technology that everyone covets, and to an inherently sustainable business model.

A traditional C corporation simply cannot act in this way, as it is predicated on the notion
that it must maximize return of investment to shareholders to the exclusion of all other
considerations. With very few exceptions, nearly every medical technology company has
adopted the C corporation model. As such, officers and directors of these companies
often find it necessary to make business decisions out of expediency, rather than out of a
commitment to making a lasting and meaningful impact. At the risk of upsetting the
status quo, we as a community need not be beholden to the medical device industry any
longer. We are a diverse enough, skilled enough, talented enough, and resourceful
enough community, of many millions strong, to be the creators and custodians of our own
technology, and to protect our enduring right to access it for as long as it should be
necessary to do so.

Flipping Beta Bionics to a big med-tech company would likely undermine and unravel
everything we have worked so hard to achieve for these many years. Our concern is that
such a transfer of control would inevitably compromise our technology, would lead it
down a conservative path that minimizes risk, reduces impact, and embraces
incrementalism. In short, there is a tendency to degenerate to the mean after such
transactions occur, and this is something we simply cannot accept. But as a benefit
corporation, we do not have to compromise our core values, and if we never return
monetary gains on stock to shareholders, but deliver on our mission, we will have
achieved our objective and fulfilled our promise; and our shareholders would have
participated directly in that success.

We are calling all like-minded individuals – people with “skin in the game” as we like to
say – to join our cause and invest in the future of Beta Bionics. The amount of your
investment is immaterial; the conviction of it is everything. The overriding purpose of
this public offering is to give the T1D community an opportunity to take a direct
ownership stake in Beta Bionics and a sense of commitment to it – to literally own a
piece of what we have been building all of these years. If it were not for the new SEC
Regulation Crowdfunding rules under the JOBS Act, Beta Bionics simply could not be
offered up as a privately held company to the T1D community in this way. This is our
opportunity to bring Beta Bionics to the T1D community, and to bring the T1D
community into Beta Bionics.

It is with a sense of great hope and cautious optimism that I look to the future of Beta
Bionics – that I might see it flourish unabated and without compromise – that I might see
our experiment succeed. When all is said and done, our amalgamation of a medical
technology company and a public benefit corporation is an experiment in the making; but
that is, after all, how we have come this far in the first place: one experiment at a time.

~ Ed Damiano

Investor Q&A

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What does your company do?

At Beta Bionics, Inc., we have developed a bionic pancreas called the iLet™, a pocket-sized, wearable medical device that autonomously manages blood sugar levels in people with diabetes. Our iLet technology has demonstrated dramatic improvements in clinical outcomes. Through its ability to continuously adapt to the ever-changing insulin needs of people with diabetes, the iLet is the quintessential embodiment of personalized medicine – a sturdy and irrevocable bridge to the ever-elusive cure.

Where will your company be in 5 years?

We are driven to build a technology that will automatically manage our children's diabetes, day and night, and keep them safe from the far-reaching harms, the immediate dangers, the emotional burden, and the fear that type 1 diabetes carries with it every day of their lives. That technology will provide a bridge that spans the divide between where we are today and the biological cure of tomorrow – a cure that has been ever present in our dreams, and ever elusive from our lives.

What are you guys building?

At Beta Bionics, Inc., we are developing a bionic pancreas system called theiLet™, a revolutionary fully integrated and wearable bionic pancreas medicaldevice platform that automatically and autonomously manages blood sugar levels in people with insulin-dependent type 1 diabetes (T1D) 24/7, and thus reduces the burden and cost of diabetes care.

Can you tell us more about the disease you’re addressing?

Diabetes is a chronic, life-threatening disease for which there is no known cure.Diabetes is caused by the body’s inability to produce or effectively utilizeinsulin, a life-sustaining hormone that regulates the body’s glucose levels.
In people who have diabetes, blood glucose levels fluctuate from extremely highlevels, a condition known as hyperglycemia, to extremely low levels, acondition called hypoglycemia. Hyperglycemia due to insulin insufficiency canlead to serious short-term complications, such as dehydration, confusion, andloss of consciousness, and long-term complications such as blindness, kidneydisease, amputations, stroke and cardiovascular disease, all of which areleading causes of morbidity and mortality. Profound lack of insulin causes thebreakdown of tissue, a condition known as diabetic ketoacidosis (DKA), which can lead to death acutely. Too much insulin on the other hand, leads to hypoglycemia which causes confusion, loss of consciousness, seizures, and can also lead to death.
There are two main types of diabetes: type 1 (T1D) and type 2 (T2D).
T1D is caused by an autoimmune response in which the body attacks and destroys the insulin-producing cells in the pancreas, called beta cells—hence the “Beta” in the name of our company. As a result, the pancreas’ ability to produce insulin is almost entirely destroyed. T1D is frequently diagnosed during childhood or adolescence. Although T2D is more prevalent, T1D is far more aggressive and difficult to treat. Prior to the discovery and purification of insulin in 1921 and 1922, a diagnosis of T1D was inevitably a death sentence.
T2D is caused by increasing resistance to the insulin produced by the beta cells. T2D has been most commonly thought of as a disease of middle and advanced age, but it is increasingly prevalent in children and adolescents. About 30 million Americans have T2D (about 10% of the population) and 10-20% of those individuals need insulin. There are approximately 10 times as many people with T2D as there are with T1D in the US.

How large is the population of people with type 1 diabetes?

There are 1.5 to 3 million Americans with T1D.

What is driving you toward innovating in this industry?

Our children were diagnosed with type 1 diabetes at very young ages. David Damiano, Max Raskin, and Marissa Hitchcock, the children of three of the board members of Beta Bionics, were diagnosed at the ages of 11 months, 7 years, and 2 years, respectively. Quite independently, but inevitably, we all realized that diabetes management is relentless, exhausting, and unforgiving. As parents of kids with T1D, this project has become entirely a labor of love. Our small team at Beta Bionics is deeply motivated to bring the iLet to fruition for the entire T1D community – a community to which we all belong.

What are options for controlling diabetes available right now?

Currently, there is no system that automatically makes therapeutic decisions to administer insulin (or insulin and glucagon) in response to a signal from a continuous glucose monitor (“CGM”) that has been FDA-approved or is commercially available. The current state of the art in the management of T1D includes:
The regular use of hand-held, in vitro blood glucose meters (BGM). These meters are capable of measuring the glucose concentration of small blood samples; the capillary blood sample is obtained by pricking the skin with a lancet.
The use of rapid-acting insulin analogs that can be adjusted to compensate for meals rather than making meal adjustments to match the insulin taken hours earlier, and, finally,
Insulin pumps that continuously deliver subcutaneous insulin at an infusion rate to suit metabolic insulin requirements, and by microburst infusion of insulin to treat carbohydrates consumed through user commanded dosing. These pumps deliver insulin but require the user to make all dosing decisions. The insulin is delivered through a very small catheter, called an infusion set, inserted just under the skin.
Although the key to managing diabetes is maintaining tight control of blood glucose levels, in practice, the management of T1D is extremely challenging, requiring perpetual vigilance and intervention with insulin or carbohydrates. Without a doubt, the iLet’s automated insulin and glucagon administration would materially reduce the burden associated with managing the disease.

What’s the problem with current solutions you’re trying to solve?

The current standard of care tools at the disposal of adults and children with T1Dare not up to the task of managing blood sugar levels. These devices demand anenormous amount of user input to function and impose upon the users the impossible task of continually making decisions about how much insulin to give themselves. Typically, the user must dose him or herself based on current blood sugar and at each meal based on an estimate of the amount of carbohydrates to be consumed. Despite best efforts, achieving “stable” insulin levels is impossible because how the insulin acts in the body is also effected by a multitude of factors including emotional stress which can cause insulin resistance, activity levels, variability in the amount of fat, protein and carbohydrate in a meal, the age and physical maturity of the individual, a growth spurt or a viral illness, etc.
Literally every imaginable emotional and physical state under the sun can drastically affect the amount of insulin needed. Puberty and pregnancy are particularly tough. And remember, tiny mistakes of too much or too little insulin results in very big swings in blood sugar, since we are talking about regulating as little as one teaspoon of sugar diluted into 4–5 liters of blood for the average adult. The sum of these factors can never be quantified accurately or regularly, and yet people are still required to make decisions and dose themselves for day and overnight control (while they are both sleeping and growing), even though they cannot possibly be aware of how the body might be changing from day-to-day and even hour-to-hour.
People do the best they can, but the results are not great.

How is your product different?

The iLet is a wearable stand-alone Class III medical device intended to provideambulatory autonomous care for insulin-dependent diabetes. The iLet consistsof:
1. an integrated dual-chamber pump capable of delivering insulinalone or insulin and glucagon at microprecise doses and integrated touchscreenuser interface;
2. a receiver for an FDA-cleared CGM;
3. a custom dual-cannula infusion set; and
4. a clinically tested suite of mathematical control algorithms that autonomously determine and command doses of insulin or glucagon based on CGM glucose data and whether glucagon is present.
The iLet requires only the patient’s weight for initialization and thenautonomously adapts in real-time to changes in an individual’s basal metabolicinsulin need, acute (e.g. circadian hormonal fluctuations, intercurrent illness, physical activity, or emotional state), or gradual (e.g. hormonal changes that occur during puberty or menopause). Our adaptive meal dose controller eliminates the need for the user to set or know their “carbohydrate-to-insulin ratios”, as it makes automatic adjustments based on dosing history for similar past meal announcements, and customizes its doses to the individual and time of day. The bihormonal configuration of our iLet also includes a proportional-derivative algorithm (based on the glucose level and rate of descent) governing subcutaneous micro-doses of glucagon to help prevent or reduce hypoglycemia beyond the capability of our insulin-only configuration.
Taken together, these mathematical algorithms provide a universal framework for a glycemic control strategy that requires no quantitative input from, or participation by, the user (besides entering body weight to initialize the iLet), but which automatically adapts insulin and glucagon dosing to meet each individual’s needs. Another challenge we overcame is enabling our iLet to remain autonomous in managing insulin and glucagon delivery even when the CGM is offline by: (1) invoking the latest high-resolution “basal rate profile” it had converged upon when the CGM was online, (2) responding to meal announcements the same way, and (3) automatically responding to user-entered blood glucose values by issuing a correction dose of insulin (or glucagon) based on its latest determination of the user’s needs. Thus our iLet never relies on, nor burdens the user, with determining subjective dosing decisions, which inevitably vary in quality and reliability over time or among different users. Indeed, our iLet provides a turnkey solution for people with T1D that comprehensively manages glycemia across a broad range of individual needs and a large spectrum of circumstances and challenges.

What is a typical goal for blood glucose levels in type 1 diabetes management?

A healthy range for blood sugar levels is between 70 and 120 mg/dl, or about ateaspoon of sugar mixed into an adult’s entire blood volume. Sustained hyperglycemia (blood sugar levels that are higher than 180 mg/dl for long periods of time) can lead to serious short-term complications, such as dehydration, confusion, and loss of consciousness, and long-term complications such as blindness, kidney disease, amputations, stroke and cardiovascular disease, or death. Those risks increase the higher the blood sugar level or the longer the blood sugar levels remain high. Hypoglycemia, blood sugar levels that are lower than 70 mg/dl, can lead to confusion, loss of consciousness or death.
Blood sugar levels can be measured by the HbA1c, which is a measurement of theaverage blood glucose level over a period of three months. An average bloodsugar of about 140 mg/dl translates to an A1c of about 6.5%, and staying there,or below that, exceeds the goal set by the American Diabetes Association (ADA)for adults of an HbA1c of 7.0%. For children, the ADA has set the goal at 7.5%, which translates to a blood glucose level of about 169 mg/dl. A major study showed that maintaining these blood sugar levels nearly eradicates the risk of complications of diabetes. However, the vast majority of people with T1D, 80% or more, are unable to meet that goal while also avoiding risky low blood sugars.

Why is it so difficult to reach safe blood glucose levels?

In order to meet the goals set by the ADA, or at least to come close to meeting them, the person with T1D is forced, by the currently available management tools, to live a very routine life with minimal fluctuations in exercise, emotion, choice and timing of food, and to keep the diabetes in mind almost all of the time. It requires the individual to prioritize the diabetes care over so many other things that are important to them. It is no surprise that few people can meet the goals.

How much does type 1 diabetes restrict what you’re able to eat?

Most people with T1D can choose any type of food as long as they can count the carbohydrates, but they will pay a price because some foods are much harder on blood sugars than others. This may vary from person to person. David, for example, used to do brilliantly with Halloween candy, since each candy comes wrapped with carbohydrate counts listed clearly, and it is not confused by any healthy protein or fiber! Max, on the other hand, needs to restrict carbohydrates to get good control.
People with T2D on the other hand, really need to restrict their carbohydrate intake, since they are relying on their own insulin production, which is insufficient. In fact, the carbohydrates themselves are part of the cause of the disease.

How did you come up with this device that solves this challenge?

Dr. Ed Damiano, a Boston University professor of biomedical engineering, and senior research scientist Dr. Firas El-Khatib (at that time a student working with Ed in his lab) began their quest to develop a portable bionic pancreas not long after Ed’s son, David, was diagnosed with T1D as an infant by his wife, Toby – a pediatrician. The task of managing the blood glucose of a child or adult with T1D is very difficult, but doubly so for an infant. A baby is so little and exquisitely sensitive to insulin, so the insulin doses are tiny and even a bit too much insulin leads to hypoglycemia, which is much more dangerous and damaging to the developing brain than to an adult. Ed and Toby were given the impossible task of estimating how many stands of pasta their your toddler was going to eat before dinner even begins—an impossible task! The entire process was absurd, and yet of paramount importance, every day and every night. It quickly became apparent that even with trying to keep every factor in mind, the only way to keep David safe and healthy was to check his blood sugar and make corrections with insulin or carbohydrate, twelve or more times per day, every day.
The worry of getting his son’s insulin requirements wrong and the ceaseless energy it required to keep him safe compelled Ed to develop an entirely new approach to managing diabetes.

How complicated was this to design? Why did it take so long to get to where you are?

It has taken over a dozen years to get us where we are today because the team wanted to completely eliminate the burdens of managing T1D. Over the years we discovered that to accomplish that goal we had to build a Class III medical device and meet the very stringent FDA regulations before the device could be approved for commercial use. This means that the design and testing is more complicated on our end, but ultimately results in a device that is much simpler on the user, and their friends and families.
We wanted to eliminate the need for counting carbohydrates, setting insulin basal rates, or determining carbohydrate-to-insulin ratios. The current standard of care approach requires a lot of trial and error and guesswork on the user’s part. Our device asks for only one thing: how much does the patient weigh?
Writing the mathematical algorithms was the focus of Firas’s Ph.D thesis. Ed and Firas made substantive modifications and improvement to the algorithms over the years based on the results of all of their rigorous pre-clinical and clinical testing of the technology.
Beyond the development of the algorithms and the platform on which the algorithms run, we had to wait for the technology surrounding the algorithm to catch up. For this device to work, we need a very accurate continuous blood glucose sensor, which did not exist until 2008. The technology had existed in theory for a long time, but it was not accurate enough until fairly recently. The first sensors, released in 2008, could predict trends well enough, but they could not tell you accurately what your blood glucose level was at any particular moment. That landscape has changed, and now, these continuous glucose monitors are nearly as accurate as the finger-stick blood glucose meters.

How do people wear the device? How large or invasive is it?

The device is about the size of the original iPhone 3, but about 50% thicker. It is not much larger than the current insulin pumps in use today.
The iLet has two drug reservoirs and can be used in the insulin-only configuration or in the bihormonal configuration (a normal insulin pump only has one drug reservoir). In either case, whether in the single- or dual-hormone configuration, each reservoir is connected to the subcutaneous space by a custom infusion set that is similar to infusion set technology currently available, except that we have designed this particular set to prevent the possibility of cross-channeling of the two drugs in the case of the dual-hormone configuration. Even with two needles that penetrate the subcutaneous space, the overall size of the set is not much bigger than a regular infusion set, so the iLet is not any more invasive than standard of care tools in use today.

Are there any other solutions being developed right now, or competitors in the market? What does that landscape look like?

The idea of automated glucose control has been around for a long time, and there are various groups that are working on algorithms and/or their own automated bionic pancreas technology, including large, established industry players and smaller development stage companies.

Can you tell us about the clinical trials that you guys have completed?

The bionic pancreas technology has been rigorously tested in inpatient and real-world outpatient and home-use studies in subjects with T1D in both the insulin-only and bihormonal configurations. The technology has evolved over the years from a laptop-driven system, to the first wearable iPhone-driven platform, to our current highly compact, fully integrated, mobile iLet.
A nine-year collaboration between Boston University (BU) and Massachusetts General Hospital (MGH), resulted in 3 inpatient studies testing a laptop version of the bihormonal bionic pancreas in adults and adolescents with T1D in the clinical research center at MGH.
The iPhone version of the bihormonal bionic pancreas has also been tested in 6 outpatient studies. Although still somewhat cumbersome, the iPhone system was a mobile platform that could be tested in home-use environments, afforded unrestricted subject activity, and allowed for longer-duration experiments than was previously possible.
In 2013, the iPhone system was tested in five-day experiments in 20 adults with T1D in downtown Boston (the Beacon Hill Study). The Summer 2013 and 2014 camp studies compared the iPhone system to standard of care insulin pump therapy in 5-day experiments in 51 children 6 to 20 years old with T1D at Camp Joslin and the Clara Barton Camp in central Massachusetts (the 2013 and 2014 Summer Camp Studies).
A collaboration between MGH, the University of Massachusetts Medical Center, Stanford University, and the University of North Carolina, Chapel Hill, resulted in the Bionic Pancreas Multicenter Study between 2014 and 2015, and compared the iPhone system with insulin pump therapy in a home-use study in 39 adults with T1D who used the device for 11 days at work and at home.
The mean CGM glucose levels obtained by the bihormonal bionic pancreas from the 2013 and 2014 Summer Camp Studies and the Bionic Pancreas Multicenter Study, were 141 ± 10 mg/dl in adults, 142 ± 12 mg/dl, in adolescents, and 137 ± 11 mg/dl in pre-adolescents. Based on these mean CGM glucose levels, we are able to project what the bionic pancreas is capable of achieving in terms of HbA1c in the three populations of ~ 6.5 ± 0.4%.
It is important to note that the bionic pancreas was able to achieve mean CGM glucose levels below the American Diabetes Association (ADA) goal for therapy in all three populations in nearly all subjects tested while simultaneously eliminating almost all hypoglycemia. On the bionic pancreas, CGM glucose levels fell below 60 mg/dl only 0.6% of the time in adults, and 1.2–1.3% of the time in adolescents and pre-adolescents in a summer camp setting.
Our clinical collaborators at Stanford and at MGH have also conducted two home-use outpatient studies testing the iPhone-based bionic pancreas system in the insulin-only configuration and targeting different glycemic set-points. In the study conducted by the Stanford team, 16 adults with T1D compared the bionic pancreas in the insulin-only configuration with insulin pump therapy in one-week experiments at work and at home (with a glucose target of 130 mg/dl). In the study conducted by the MGH team, 20 adults with T1D compared our bionic pancreas in the insulin-only configuration at a set-point of 130 mg/dl, with the bionic pancreas in the bihormonal configuration at glucose set-points of 100, 115, and 130 mg/dl, and with insulin pump therapy in 3-day experiments at work and at home.
The mean CGM glucose levels obtained by the insulin-only bionic pancreas with a glycemic set-point of 130 mg/dl was 161 ± 9 mg/dl in the Stanford Insulin-only Study and 160 ± 17 mg/dl in our MGH Set-Point Study, with CGM glucose levels falling below 60 mg/dl only 0.9% and 0.8% of the time, respectively. Based on these mean CGM glucose levels, we project that our insulin-only bionic pancreas would achieve an HbA1c in adults of 7.2 ± 0.5%, while simultaneously limiting CGM glucose levels below 60 mg/dl to less than 1% of the time.
Thus, we project that the insulin-only configuration of our bionic pancreas would result in HbA1c levels of ~ 7.3%. The bionic pancreas in the bihormonal configuration would obtain HbA1c of ~ 6.5%, which would effectively eradicate all long-term complications of T1D.
The academic team has also tested the first generation of our fully integrated iLet bionic pancreas in diabetic swine. Notably, results of the swine study showed no difference in the performance of our previous-generation iPhone-based bionic pancreas platform relative our iLet platform.
Despite challenging conditions, and no restrictions on diet, exercise or activity, the previous generations of the bionic pancreas technology have simultaneously lowered mean glucose and reduced hypoglycemia relative to comparator groups and demonstrated that the current iteration of the technology is ready to withstand the rigors of a pivotal trial.

What’s left before you’ll be able to go broadly to market?

Before we can bring the iLet to market, we have to test the final platform in what we are calling the Bionic Pancreas Pivotal Trial. We are currently finishing both the manufacturing of the final platform as well as the pivotal trial protocol. We need to have patients wearing the device in a longer duration clinical trial to prove for ourselves, the T1D community, and the FDA that the iLet is safe and effective in managing blood sugar levels; we are designing this pivotal trial to do just that.
We plan to release the iLet commercially in two configurations: first, an insulin-only configuration, to be followed by a dual-hormone configuration, while we work with pharmaceutical partners to get a stable, pumpable formulation of glucagon approved for chronic use.

What is a stable format of glucagon, and why hasn’t it been FDA approved yet?

The current standard of care for people with T1D does not involve the use of glucagon as a hormone to raise blood sugar levels. Instead, people with T1D typically carry with them some form of fast acting sugar, like candy or juice, that they can ingest when their blood sugar levels fall too low. The standard of care today reserves glucagon for emergency indications. In case of emergency, a powdered form of glucagon is reconstituted with a diluent and then injected into the muscle tissue when the person with T1D is having a seizure, has lost consciousness or is otherwise unable to ingest carbohydrates. The glucagon signals the liver to release its stored glucose into the bloodstream, which almost instantaneously raises blood glucose levels.
In previous trials of the bionic pancreas system, the subjects reconstituted the powdered glucagon and loaded the glucagon into the pump. This reconstitution was only stable for about 30 hours, which meant that the subjects had to replace the glucagon reservoir every day. This 24-hour replacement routine allowed our clinical partners to test the algorithm and to show the FDA that, as a proof of concept, the bionic pancreas technology works. However, reconstituting rescue glucagon for long-term use is impracticable and unaffordable. We will not commercially release a dual hormone system until a stable, pumpable formulation of glucagon is approved for chronic use.

How far away are you from having FDA approval for glucagon?

The FDA approval process is going to take a minimum of 12 months. We do not expect the approval to come in time for the start of our pivotal trial, but we have decided not to wait. Instead, we plan to proceed with the insulin-only configuration in the meantime.

What is your plan until you get that FDA approval for glucagon?

Until the FDA approves glucagon for chronic use, we plan to proceed with the insulin-only configuration of our iLet. We are designing a pivotal trial that will prove to ourselves, the T1D community, and the FDA that our system, using only insulin, is safe and effective. We expect it to perform better than the current standard of care for nearly everyone.
We plan to start the pivotal trial in March of 2017. After speaking with the FDA, we are hopeful that the final decision from the FDA on the insulin-only configuration will come as early as the fourth quarter 2017, but not later than the first quarter of 2018.
This insulin-only configuration can achieve blood glucose control that is very close to the A1c goals set by the ADA and will be a large improvement over the current standard of care. We plan to be running the pivotal trial for the dual-hormone configuration soon after the insulin-only configuration is released.

What’s the risk of not completing the insulin-only trial?

We are blazing a new trail here, and as with any endeavor that attempts to do so, there are a few things that can go wrong along the way, including failing to raise enough money to run the pivotal trial. The pivotal trial, we hope, will be paid for by a National Institute of Health grant that we’ve already applied for. There are $20 million research dollars available that have been earmarked specifically for the purposes of running a pivotal trial for an artificial pancreas system. We have asked for $15.5 million of that amount to run our pivotal trial. We believe that we are the best candidate for that money, but we will not know whether the NIH has granted us the money until the fall of 2016.

How much will this trial cost?

The $15.5 million NIH grant would fully fund the pivotal trial we have proposed in our grant application. However, the 16 clinical teams we have assembled for the pivotal trial offer an unprecedented opportunity to leverage the immense infrastructure that we have put in place to add additional arms to that study or run a parallel pivotal trial that would test additional technologies simultaneously while testing the primary and secondary outcomes we have proposed as our core objectives.

On the technical side of the glucagon pump, do you feel like there’s risk there?

We think that the glucagon algorithm for using this second hormone is well tested. One worry that has been raised is that the system would be too dependent on the glucagon rescue, so if the glucagon failed, hypoglycemia was inevitable. We think this risk is tempered because the insulin algorithm is proactive in its ability to suspend insulin pre-emptively. This means that even if the glucagon was somehow interrupted, many low blood sugar events could be mitigated. Additionally, the risk can be mitigated even further by built-in alarms designed to alert the user whenever glucagon is interrupted or if blood sugar levels are low, or trending low.
We believe that glucagon is vital for delivering the iLet’s maximum capabilities in managing blood sugars and allowing the most freedom to the wearer. Glucagon restores spontaneity in life, by allowing people to be physically active whenever, as much, and as often as they desire without having to stop and ingest empty calories in the form of simple sugars and juice. This, in turn, promotes a healthier lifestyle, both physically and emotionally.

Why are you the team to do this?

We are the team to change the standard of care for the treatment of T1D because our technology is transformative and we have skin in the game driving us to work tirelessly to bring this technology to market.
Ed Damiano has led the science and engineering effort on this project for over a dozen years, starting shortly after his infant son, David, developed T1D. He’s led the vision and has developed a broad skill set to tackle this complex project. The entire IP portfolio was created by his engineering team at BU, has now been licensed by BU in worldwide exclusive license agreements to Beta Bionics. This is a huge vote of confidence from BU.
Firas-El Khatib, Ph.D, started working on the bionic pancreas project as Ed’s Ph.D student. Firas is the primary author of the mathematical dosing algorithms that represent the core technology upon which the bionic pancreas is built. Firas will continue to innovate by leading the company’s research and development efforts.
Ed Raskin represents the public benefit interest of the company as the Public Benefit officer. Serafina Raskin is the company’s General Counsel. Serafina and Ed initially volunteered their time before becoming officially involved. Their motivation has been their son, Max, who developed T1D 3 years ago, at age 7. Our Chief Financial Officer is Gibb Clarke, who led other medical device startups before joining the Bionic Pancreas team.
Toby Milgrome, Ed Damiano’s wife, is co-owner with Ed. She has been part of the conversation from the very beginning, and brings her insights as a pediatrician and mother of a TID child. She shares the vision and values of Beta Bionics.

Why’d you choose to incorporate as a public benefit corporation?

Our original plan was simply to write mathematical algorithms that calculated automatic dosing requirements and then license those algorithms to an existing medical device company. As we got further down the road, however, we started seeing that established companies would often develop or purchase fantastic technology only to abandon those technologies based on various business considerations. We could not let that happen to the bionic pancreas technology and to the T1D community.
We decided to incorporate as a Public Benefit Corporation because we want to have the power to make each business decision with a focus on the benefit to the T1D community—and not necessarily to the investor. We have no problem with making a profit (and hope to achieve that goal one day!) but we refuse to sacrifice our values and commitment to the T1D community for the sake of turning a profit.

What cost savings do you create for the patient?

One of the major cost savings the iLet will provide is in avoiding hospitalizations of people with T1D. With current standard of care technologies, people with T1D face a high chances of at least one hospitalization every year. Each hospitalization can cost tens of thousands of dollars. By preventing the vast majority of those hospitalizations, we will be saving a lot of money.
The other component here is one of quality of life and is harder to quantify. The current standard of care technologies enforce a great deal of planning on each person with T1D, and their friends and family, and leave no room for the spontaneity of life. Our dual-hormone configuration, and to even the single-hormone configuration, would allow room for that spontaneity to return so that every meal, every activity, every trip need not be carefully centered around blood sugar levels. Changing this will be huge for the T1D community.

What does the market look like?

Right now, only about 25-30% of people with T1D in the U.S. are on insulin pump therapy. Even smaller is the percentage of people with T1D on both insulin pump therapy and continuous glucose monitor (CGM). Most people with T1D use insulin injection therapy to manage their diabetes. Because current insulin pumps still require so much work on the user’s part, and the results of all that hard work are not guaranteed to be good, many people do not see the benefits as being worth the burdens. In addition, although many love the comfort of the CGM alarms, many people find them to be a nuisance and an interference with their every-day-lives.
Our device is not simply a newer model insulin pump. It is truly a bionic pancreas that mimics the functions of the human pancreas - it does all the monitoring, all the calculation, and all of the dosing for you, allowing you to live your life … uninterrupted.

How big is the insulin pump market?

The insulin pump market is a robust, large niche market, estimated to be as large as $26 billion.

Who will ultimately pay for this once you are approved?

We expect that there will be an opportunity for reimbursement from insurance companies because we will be saving the cost of many hospitalizations and emergency department visits. We expect that most people would have access to this technology in the United States. Most people with T1D are covered so cost should not be a hurdle here.
The technology is new and transformative, so there does not yet exist a billing code for that yet built into the system, but we will be developing that over the next 18 months. We are also looking at the possibility of expanding into Europe, where several regions have their own launch and reimbursement structures, and we have been exploring what we need to do in order to make sure we are sustainable in those environments, as well.

Who else has invested in your product?

Eli Lilly& Co., the major pharmaceutical company, invested $5 million in Beta Bionics. We saw that as a huge vote of confidence from such a major player in the diabetes field. Lilly also has a board representative on our company’s board of directors, who is a valuable sounding board for top-level management decisions.

Can you tell us about your patents?

We have exclusive, worldwide sub-licensable licenses from the Trustee’s of Boston University (“BU”) to a portfolio of U.S. and international patents (both issued and pending) and a trademark that relates to iLet. These patents can be grouped into two clusters. The first surrounds the mathematical algorithms that enable the iLet to make dosing decision automatically and autonomously and the second surrounds the design of the iLet, the infusion set, and the components thereof that allow us to build the technology with safety and efficacy as a priority.
Under the terms of the licensing agreements, we are responsible for specified milestone and maintenance payments, as well as royalty payments on net sales once commercialized. We also have the right to sublicense our rights under the license agreements but are required to pay a percentage of any sublicense income.
Additionally, under the terms of the licensing agreements, we must develop, manufacture, sell, and market the technology pursuant to specified milestones and time schedule. In the event we fail to meet the milestones, BU is entitled to terminate the licensing agreements with prior written notice, provided we do not cure the breach. Upon termination, the intellectual property under the licenses would revert back to BU.
We believe that proprietary protection of our technologies is critical to the development of our business. Our intellectual property strategy includes protecting existing, and further developing, proprietary technology for the sourcing, scale up, and manufacturing of the iLet. This strategy includes expanding on technologies in-licensed to us as well as in-licensing additional technologies through collaborations with universities and biotech companies.
We rely upon trade-secret protection for certain confidential and proprietary information and take active measures to control access to that information. There is also substantial proprietary know-how surrounding the iLet development and manufacturing processes that remains a trade secret. We currently have confidentiality and non-disclosure agreements with all of our employees, consultants, vendors, advisory board members and contract research organizations.

Financials

At a Glance

January 1
to December 31

$0

Revenue

-$3,197,488

Net Loss

$245,374
[8%]

Short Term Debt

$1,000,000

Raised in 2016

Cash on Hand

Income

Balance

Narrative

A. Financial Condition of Beta Bionics

1. We Have No Revenue andWon’t Until Receiving Regulatory Approval, Which We May Never Get.

As a newly formed development stage medical technology company– whose only product, the iLet, has not yet achieved regulatory approval – wedo not have any revenue, nor can we obtain revenue on the sale of any productuntil the iLet is approved for sale. We may not be able to achieve regulatoryapproval. Aside from such a result being extremely disappointing to the T1Dcommunity, your investment could be rendered worthless. Indeed, the likelihoodof failure is historically high in the medical device field. You should not purchaseshares under this offering unless you can afford to lose the investment.

2. Even If We AchieveRegulatory Approval, Our Public Benefit Corporate Structure DeemphasizesShareholder Return and Emphasizes the Delivery of a Public Benefit to the T1DCommunity

We underscore, that even if the Company is financiallysuccessful, our corporate structure as a public benefit corporation requiresour management team and Board of Directors to make decisions that balance ourresponsibility to you and other shareholders with our obligation to Company’spublic benefit mission. In short, our interestin making money for you and other shareholders will not supersede the interestsof the T1D community.

3. Assuming We Can ObtainApproval and Raise Enough Money to “Go To Market”, Company Revenue on Sales Isa Huge Guess in a Rapidly Evolving Payer Market – It Is Not Possible ToReliably Predict Any Reimbursement Model at this Stage.

The Company cannot reliably estimate howmuch it can expect in revenue on the sale of the iLet. The earliest that weexpect to generate revenue from the sale of the iLet in the insulin-onlyconfiguration is in the 4th Quarter of 2018. However, that estimate can easilybe delayed for multiple reasons, such as failure to raise enough funds toconduct or complete the pivotal trial, lack of funds to operate the Company, lackof volunteer subjects to compete the pivotal trial, or inability to obtainregulatory approval.

Even if the Company is successful inmeeting all of these challenges, a model for reimbursement of an autonomousglucose control system does not yet exist. The only analogous reimbursement structure is the insulin pump and CGMreimbursement model. As recently as May2016, at least one payer has disclosed that its covered patients 18 years ofage and over will no longer be permitted to choose their own insulin pumpsupplier due to an exclusive relationship between the payer and a pumpmanufacturer. We are working to understand exactly the nature of this exclusiverelationship, but given this recent development, it is conceivable that payersmay develop exclusive anti-competitive arrangements with manufacturers ofautonomous or partially autonomous glucose control systems, which may operateto exclude the Company from ever obtaining third party reimbursement. Such a result may be fatal to the Company’sviability even after achieving regulatory approval.

4. 2016and 2017 Fiscal Picture

We note that in connection with ouroffering, as required by Regulation Crowdfunding, an independent accountant’sreview of our financials through 2015 was completed and is disclosed to allinvestors in connection with our offering. However, anyone reviewing this Form C disclosure and following the BetaBionics story can easily understand that, other than incorporating the Company,licensing out technology associated with the iLet from Boston University andclosing an initial Series A investment with Eli Lilly & Company, BetaBionics was merely preparing for operations starting in 2016. Accordingly, a review of our 2015 auditedfinancial statements does not answer how much money we have spent in 2016 thusfar. It also does not answer how muchmoney we expect to spend through 2017.

We emphasize that the below profit andloss estimates are only projections and are subject to significantdeviation.

Through the end of the first quarter of2016 we have spent a total of $377,208. Weexpect to spend $6,120,754 to continue operations through 2016, which means weneed to raise $1,120,754 to meet our operating expenses through the end of2016. Additionally, we will need to raise money beyond 2016 for operations in2017. We anticipate that the Companywill need at least an additional $8,810,000 to operate through 2017. As evidentby the above table, the vast majority of funds are dedicated to further productdevelopment, which involves further engineering changes, manufacturing moldpurchasing and all costs associated with building the iLet to acceptablequality standards for additional clinical trials.

Our cash and cash equivalents as of March31, 2016 were held for working capital purposes. We do not enter intoinvestments for trading or speculative purposes. Our policy is to invest anycash in excess of our immediate requirements in investments designed topreserve capital and provide liquidity. Accordingly, our cash and cashequivalents are invested exclusively in demand deposit accounts and moneymarket funds that are currently providing only a minimal return.

We expect that the proceeds of thisoffering will improve our liquidity and provide additional working capital forour Company and capital to pursue our product development, support consultantexpenses such as quality and regulatory, help us sustain clinical trialexpenses, support payroll expenses, cover general and administrative costs aswell as pay for any travel associated with on-site visits to various suppliersand business partners. The proceeds of this offering will enable the businessto continue to pursue its main activities and are necessary to our viability. As evident by our spending needs to stay ator near development schedule, the Company does not current have enough cash onhand to meet this goal. If our offeringsucceeds at the maximum funding amount, then the Company will have a projected2016 deficit of less than $150,000.

We note that Quarter 1 expenses weresignificantly less than projected expenses throughout the remainder of2016. This is attributable to our hiringramp up, business start-up process and preparing to transition the bionic pancreasfrom a fully academic setting to a hybrid academic/commercial venture. We expect this trend to continue as BetaBionics grows and simply engages in more activates leading to Pivotal Trial andregulatory approval filing.

Capital Resources. As discussed, we havefinanced our operations exclusively through private sales of Series A PreferredShares to Eli Lilly & Company. Generally, the terms of the sale of those securities were $5,000,000 inexchange for the equivalent of 5% of Beta Bionics along with certainliquidation preferences, rights of first negotiation and refusal on certaintypes of arrangements, protection against dilution (subject to expiration uponregulatory approval) and other certain rights that are typical of a “first-in”investor.

A note from Wefunder. Unlike companies on the NASDAQ, early-stage startups have little operating history. Financial analysis is not as useful when there is limited data. It's more important to predict the size of the future market. If the founder achieves their vision, will enough customers pay the company enough money?

It's also common for fast-growing startups to lose money even faster: they are investing in future growth. In these cases, it's often better to check if the Cost of User Acquisition (CAC) is lower than the Lifetime Value (LTV) of that customer. If one spends $1000 today to make $10,000 over the next five years, that may be a smart bet. Amazon is a famous example of re-investing potential profits to maximize growth over 20 years.

Net Margin:
N/A

Gross Margin:
N/A

Return on Assets:
-41%

Earnings per Share:
-$3.55

Revenue per Employee:
$0

Cash to Assets:
93%

Revenue to Receivables:
~

Debt Ratio:
3%

Risks

1

We do not own the intellectual property
underlying the iLet.
We rely on licenses from the Trustees of
Boston University to use the various technologies that are material to
operation of the iLet. We do not own the patents that underlie these licenses.
The first license grants us exclusive worldwide rights under the five patents
and one copyright related to the control algorithm run by the iLet. The second license grants us exclusive
worldwide rights related to five patents relating to the infusion sets which
deliver subcutaneously the glucagon and insulin hormones. Our rights to use
these technologies and employ the inventions claimed in the licensed patents
are subject to our abiding by the terms of the licenses and meeting certain
milestones set forth in the applicable license agreements. In addition, while
we have significant input and participation into the strategy for the
enforcement of the patent and trademark rights, the Trustees of Boston
University has the ultimate control over the prosecution and enforcement
strategies relating to the patents and trademarks subject to these licenses. As
a result, we are largely dependent upon the Trustees of Boston University
determine the appropriate strategy for prosecuting and enforcing the rights to
the intellectual property under the license agreements.

2

Our ability to protect our intellectual property and proprietary
technology is uncertain.
We rely on our trademarks and trade names
to distinguish our products from the products of our competitors, and have
registered or applied to register many of these trademarks. We cannot assure
you that our trademark applications will be approved in a timely manner or at all.
Third-parties also may oppose our trademark applications, or otherwise
challenge our use of the trademarks. In the event that our trademarks are
successfully challenged, we could be forced to rebrand our products, which
could result in loss of brand recognition, and could require us to devote
additional resources to marketing new brands. Further, we cannot assure you
that competitors will not infringe upon our trademarks, or that we will have
adequate resources to enforce our trademarks.

We have entered into
confidentiality agreements and intellectual property assignment agreements with
our officers, employees, temporary employees and consultants regarding our
intellectual property and proprietary technology. In the event of unauthorized
use or disclosure or other breaches of those agreements, we may not be provided
with meaningful protection for our trade secrets or other proprietary
information.

If a competitor
infringes upon one of our patents, trademarks or other intellectual property
rights, enforcing those patents, trademarks and other rights may be difficult
and time consuming. Patent law relating to the scope of claims in the industry
in which we operate is subject to rapid change and constant evolution and,
consequently, patent positions in our industry can be uncertain. Even if
successful, litigation to defend our patents and trademarks against challenges
or to enforce our intellectual property rights could be expensive and time
consuming and could divert management’s attention from managing our business.
Moreover, we may not have sufficient resources or desire to defend our patents
or trademarks against challenges or to enforce our intellectual property
rights. Litigation also puts our patents at risk of being invalidated or
interpreted narrowly and our patent applications at risk of not issuing.
Additionally, we may provoke third-parties to assert claims against us. We may
not prevail in any lawsuits that we initiate and the damages or other remedies
awarded, if any, may not be commercially valuable. The occurrence of any of
these events may have a material adverse effect on our business, financial
condition and operating results.

3

The medical device industry is characterized by patent litigation, and we
could become subject to litigation that could be costly, result in the
diversion of management’s time and efforts, or require us to pay damages.
Our
success will depend in part on not infringing the patents or violating the
other proprietary rights of third-parties. Significant litigation regarding
patent rights exists in our industry. Our competitors in both the United States
and abroad, many of which have substantially greater resources and have made
substantial investments in competing technologies, may have applied for or
obtained or may in the future apply for and obtain, patents that will prevent,
limit or otherwise interfere with our ability to make and sell our products.
The large number of patents, the rapid rate of new patent issuances, and the
complexities of the technology involved increase the risk of patent litigation.

In the future, we
could receive communications from various industry participants alleging our
infringement of their intellectual property rights. Any potential intellectual
property litigation could force us to do one or more of the following:

pay substantial damages to the party whose intellectual
property rights we are allegedly infringing;

•

redesign those products that contain the allegedly
infringing intellectual property; or

•

attempt to obtain a license to the relevant intellectual
property from third-parties, which may not be available on reasonable terms
or at all.

Any litigation or claim against us, even
those without merit, may cause us to incur substantial costs, and could place a
significant strain on our financial resources, divert the attention of
management from our core business and harm our reputation. Further, as the
number of participants in the diabetes market increases, the possibility of
intellectual property infringement claims against us increases.

4

We may be subject to damages resulting from claims that we, or our
employees, have wrongfully used or disclosed alleged trade secrets of our
competitors or are in breach of non-competition or non-solicitation agreements
with our competitors.
We may be subject
to claims that we, or our employees, have inadvertently or otherwise used or
disclosed trade secrets or other proprietary information of these former
employers or competitors. In addition, we have been and may in the future be
subject to allegations that we caused an employee to breach the terms of his or
her non-competition or non-solicitation agreement. Litigation may be necessary
to defend against these claims. Even if we successfully defend against these
claims, litigation could cause us to incur substantial costs, and could place a
significant strain on our financial resources, divert the attention of
management from our core business and harm our reputation. If our defense to
those claims fails, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel. We cannot guarantee that
this type of litigation will not continue, and any future litigation or the
threat thereof may adversely affect our ability to hire additional direct sales
representatives. A loss of key personnel or their work product could hamper or
prevent our ability to commercialize proposed products, which could have an
adverse effect on our business, financial condition and operating results.

5

If we or our
third-party suppliers violate the FDA’s good manufacturing practice
regulations, our ability to market our product in a cost-effective and timely
manner will be impaired.
If we should
obtain marketing approval for our product, such product, along with the
manufacturing processes, post-approval clinical data and promotional activities
for the product, would be subject to continual review and inspections by the
FDA and other regulatory agencies. Under
the FDA’s medical device reporting (“MDR”) regulations, we must report to the
FDA any incident in which our product may have caused or contributed to a death
or serious injury. Further, under the MDR, we must report any incident in which
our product malfunctioned in such a manner that, if the malfunction were to
recur, it would likely cause or contribute to a death or serious injury. Finally, we and our third-party suppliers
must comply with the FDA’s Quality System Regulation (“QSR”), and other
regulations, which address the methods and documentation of the design,
testing, production, control, quality assurance, labeling, packaging,
sterilization, storage and shipping of our products. The FDA enforces
compliance with the QSR through announced and unannounced inspections of
manufacturing and other facilities, conducted at periodic intervals.

We do not presently
have our own manufacturing facilities; however, if, in the future, we acquire
manufacturing facilities, we will seek the FDA’s approval of the facility for
medical device manufacturing and report the results of the FDA’s inspection of
the facility. We cannot assure you that we will acquire manufacturing
facilities or that we will be able to obtain FDA or other regulatory approval
of such facilities.

If our suppliers
or we fail to comply with the applicable regulatory requirements in any serious
respect, or if, in response to any observed deficiencies, we propose a
corrective action plan that is deemed insufficient, the FDA could take
enforcement action against us.
Enforcement action could include any of the following measures: warning letters; fines and civil penalties;
unanticipated expenditures; delays in approving or refusal to approve our
continuous glucose monitoring systems; withdrawal of approval by the FDA or
other regulatory bodies; product recall or seizure; interruption of production;
operating restrictions; injunctions; and criminal prosecution. Any such
action could have a material adverse impact on our reputation, business,
financial condition and operating results.
If we or our suppliers have significant non-compliance issues, or if any
corrective action plan that we or our suppliers propose in response to observed
deficiencies is not sufficient, the FDA could take enforcement action against
us. Any of the foregoing actions could have a material adverse effect on our
reputation, business, financial condition and operating results.

Even if regulatory
approval of a product is granted, the approval may be subject to limitations on
the indicated uses for which the product may be marketed or contain
requirements for costly post-marketing testing and surveillance to monitor the
safety or efficacy of the product. If problems with our product are later
discovered, including software bugs, the occurrence of unanticipated adverse
events, manufacturing problems, or the failure to comply with regulatory
requirements such as the QSR, such problems may result in restrictions on the
product or manufacturing processes, withdrawal of the product from the market,
voluntary or mandatory recalls, fines, suspension of regulatory approvals,
product seizures, injunctions, or the imposition of civil or criminal
penalties.

6

Recall of our product, or the discovery of safety issues with our
product, could have a significant negative impact on us
. If the FDA
determines that our product shows material deficiencies or defects in design or
manufacture, or poses an unacceptable risk to health, the FDA has the authority
to require the recall of our product.
Manufacturers may also recall a product if they find any material deficiency
in the product. In the event our product
is associated with an unacceptable risk to health, component failures,
manufacturing errors, design or labeling defects or other deficiencies, a
government-mandated or voluntary recall by us, or one of our distributors,
could occur. If our product were
recalled, such recall would divert managerial and financial resources and have
an adverse effect on our reputation, financial condition and operating
results. These results could impair our
ability to produce the product in a cost-effective and timely manner.

Further, under the
FDA’s medical device reporting (“MDR”) regulations, we must report to the FDA
any incident in which our product may have caused or contributed to a death or
serious injury, or in which our product malfunctioned in such a manner that, if
the malfunction were to recur, it would likely cause or contribute to a death
or serious injury. If the product were
to malfunction repeatedly, voluntary or involuntary product recall could
result. Such a result could divert
managerial and financial resources, impair our ability to manufacture our
product in a cost-effective and timely manner, and have an adverse effect on
our reputation, financial condition and operating results.

Any adverse event
involving our product could result in future voluntary corrective actions, such
as recalls or customer notifications, or regulatory agency action, which could
include inspection, mandatory recall or other enforcement action. If we are
required to take corrective action, such action, whether voluntary or
involuntary, will require the dedication of our time and capital, distract
management from operating our business, and may harm our reputation and
financial results.

7

If we fail to comply with the extensive government regulations affecting
us, our business will suffer.
Governmental
authorities – principally the FDA and various state regulatory agencies –
regulate the medical device industry extensively. The regulations are complex
and are subject to rapid evolution and varying interpretations. Regulatory
restrictions or changes could limit our ability to conduct or expand our
operations, or could result in higher than anticipated costs or lower than
anticipated sales. The FDA and other U.S. governmental agencies regulate
numerous elements of our business, including product design and development;
pre-clinical and clinical testing and trials; product safety; establishment
registration and product listing; labeling and storage; marketing,
manufacturing, sales and distribution; pre-market clearance or approval;
servicing and post-market surveillance; advertising and promotion; and recalls
and field safety corrective actions.

Before we can
market or sell a new regulated product or a significant modification to an
existing product in the United States, we must obtain either approval under
Section 510(k) of the FDCA or approval of a pre-market approval (“PMA”)
application from the FDA. As a Class III medical device that we must comply
with the PMA approval process and demonstrate the safety and effectiveness of
the product on the basis of extensive data. The PMA process is customarily
required for products that are deemed to pose the greatest risk, such as
life-sustaining, life-supporting or implantable devices. If a product is
approved through a PMA application process, the product generally needs FDA
approval before it can be modified. The process of obtaining regulatory
approvals to market a medical device can be costly and time-consuming, and we
may not be able to obtain these approvals on a timely basis, or at all, for our
proposed product.

If the FDA
requires us to conduct a more rigorous examination for future products or
modifications to our existing product than we had expected, we could be delayed
in, or prevented from, introducing our product or modifications. A delay or cancellation could cause our sales
to decline or not to increase in accord with our forecasts. In addition, the
FDA may determine that future iterations of our product will require the more
costly, lengthy and uncertain PMA process.

The FDA can delay, limit or deny approval
of a product for many reasons, including our inability to demonstrate that our
product is safe and effective for its intended use; the insufficiency of our
clinical trials data to support approval; and the failure of our manufacturing
process or facilities to meet applicable requirements.

In addition, the FDA may change its
clearance and approval policies, adopt additional regulations or revise
existing regulations, or take other actions which may prevent or delay approval
of our product. Such actions by the FDA
could also impact our ability to modify our currently approved product on a
timely basis.

If we experience
any delay in obtaining approval for our product, or any failure to maintain
approval for our product, such circumstances could prevent us from generating
revenue from the product or achieving profitability. In addition, the FDA and
other regulatory authorities have broad enforcement powers. Regulatory
enforcement or inquiries, or other increased scrutiny on us, could cause
customers not to use our product and could negatively impact our reputation and
the perceived safety and efficacy of our product.

If we fail to
comply with applicable regulations, such failure could jeopardize our ability
to sell our product and result in enforcement actions such as fines, civil
penalties, injunctions, warning letters, recalls of products, delays in the
introduction of products into the market, refusal of the FDA or other
regulators to grant future approvals, and the suspension or withdrawal of
existing approvals by the FDA or other regulators. If we were to incur any of
these sanctions, we could experience higher than anticipated costs or lower
than anticipated sales. As a result, the sanctions could have a material
adverse effect on our reputation, business, financial condition and operating
results.

Further, we may
consider international expansion opportunities in the future. If we expand our
operations outside of the United States, we will become subject to various
additional regulatory and legal requirements under the applicable laws and
regulations of the international markets. These additional regulatory
requirements may involve significant costs and, if we are not able to comply
with any such requirements, our international expansion and business could be
significantly harmed.

The healthcare
industry is subject to extensive federal, state and local laws and regulations
relating to billing for services; financial relationships with
physicians and other referral sources; inducements and courtesies given to
patients; quality of medical equipment and services; confidentiality,
maintenance and security issues associated with medical records and
individually identifiable health information; medical device reporting; false
claims; professional licensure; and labeling products. These
laws and regulations are complex and, in some cases, still evolving. In many
instances, these laws and regulations have not received significant regulatory
or judicial interpretation. If our
operations are found to violate any of the federal, state or local laws and
regulations which govern our activities, we may be subject to the penalty
associated with the violation. Such
penalties could include civil and criminal penalties, damages, fines or
curtailment of our operations. Since many of these laws and regulations have
not been fully interpreted by the regulatory authorities or the courts, we face
an increased risk that we could be found in violation of such laws and
regulations. Even if we successfully
defend an action against us for violation of these laws or regulations, the
defense could cause us to incur significant legal expenses and divert our
management's time and attention from the operation of our business.

In
addition, healthcare laws and regulations may change significantly in the
future. Any such change may adversely affect our business. A court’s or
regulatory agency’s review of our business may result in a determination that
could adversely affect our operations. Also, the healthcare regulatory
environment may change in a manner that restricts our operations.

We
are not aware of any governmental healthcare investigations of us or our
executives. However, if our executives or managers were to be subject to such
investigations, we could incur significant liabilities or penalties, as well as
adverse publicity.

8

If we undertake to modify to our product, we may be required to obtain
new regulatory approvals, or to cease marketing or recall the modified product
until approvals are obtained.
If we were to modify our product after PMA approval, and such modification could
significantly affect the product’s safety or effectiveness, or constitute a
major change in its intended use, design, or manufacture, we would be required
to obtain a modification to the PMA. The FDA requires every manufacturer to
make the determination as to whether to seek modification of a PMA; however,
the FDA may review any manufacturer’s decision. The FDA may not agree with our
decision regarding whether new approvals are necessary. If we determine that a
modification to a PMA approval is unnecessary, and the FDA disagrees with our
determination and requires us to submit new PMAs for modifications to our
previously-approved product, we may be required to cease marketing or to recall
the modified product until we obtain approval.
In that event, we may be subject to significant regulatory fines or
penalties.

Further, the FDA’s
ongoing review of the PMA process may make it more difficult for us to modify
our previously approved product, either by imposing stricter requirements as to
when to initiate a new PMA submission, for a modification to a previously
approved product, or by imposing more strenuous review criteria to such
submissions.

9

If we violate applicable fraud and abuse laws, including anti-kickback
laws and anti-referral laws, our business could suffer.
Numerous federal
and state laws pertain to healthcare fraud and abuse, including anti-kickback
laws and physician self-referral laws. Under these laws, our relationships with
healthcare providers and other third-parties are subject to review. Violations
of these laws are punishable by criminal and civil sanctions, including
imprisonment and exclusion from participation in federal and state healthcare
programs such as the Medicare, Medicaid and Veterans Administration health
programs.

Healthcare fraud
and abuse regulations are complex, and even minor irregularities can
potentially give rise to claims that a statute or prohibition has been
violated. The laws that may affect our ability to operate include:

•

the federal healthcare programs’ Anti-Kickback Law, which
prohibits, among other things, persons from knowingly and willfully
soliciting, receiving, offering or providing remuneration, directly or
indirectly, in exchange for or to induce either the referral of an individual
for, or the purchase, order or recommendation of, any good or service for
which payment may be made under federal healthcare programs such as the
Medicare and Medicaid programs;

•

federal false claims laws which prohibit, among other
things, individuals or entities from knowingly presenting, or causing to be
presented, claims for payment from Medicare, Medicaid, or other third-party
payors that are false or fraudulent;

•

the federal Health Insurance Portability and Accountability
Act of 1996, which created federal criminal laws that prohibit executing a
scheme to defraud any healthcare benefit program or making false statements
relating to healthcare matters;

•

the Federal Trade Commission Act and similar laws
regulating advertisement and consumer protections; and

•

foreign and U.S. state law equivalents of each of the
above federal laws, such as anti-kickback and false claims laws which may
apply to items or services reimbursed by any third-party payor, including
commercial insurers.

Further, the
Patient Protection and Affordable Care Act, as amended by the Healthcare and
Education Affordability Reconciliation Act (collectively, the “PPACA”), amends
the intent requirement of the federal anti-kickback and criminal healthcare
fraud statutes. As such, a person or entity can now be found guilty under the
PPACA even if he or it lacks actual knowledge of the statute or specific intent
to violate it. In addition, under the PPACA, the government may assert that a
claim resulting from a violation of the federal anti-kickback statute
constitutes a false or fraudulent claim for purposes of the false claims
statutes. Sanctions for violation of these anti-kickback laws include monetary
fines, civil and criminal penalties, exclusion from Medicare and Medicaid
programs and forfeiture of amounts collected in violation of those
prohibitions. Any violations of these laws, or any action against us for
violation of these laws, regardless of the outcome, could create a material
adverse effect on our reputation, business, financial condition and operating
results.

Any state or
federal regulatory review of us, regardless of the outcome, would be costly and
time-consuming. Additionally, we cannot predict the impact of any changes in
the applicable laws, whether or not retroactive.

10

Legislative or regulatory healthcare reforms may make it more difficult
and costly for us to obtain regulatory approval of our product.
The sales of our
product depend in part on the availability of coverage and reimbursement from
third-party payors such as government health administration authorities,
private health insurers, health maintenance organizations and other
healthcare-related organizations. Both the federal and state governments in the
United States continue to pass new legislation and regulations designed to
contain the cost of healthcare. This legislation and regulation may result in
decreased reimbursement for medical devices, which may further create
industry-wide pressure to reduce the prices charged for medical devices. This
could harm our ability to market our products and generate sales.

In addition, FDA
regulations and guidance are often revised or reinterpreted by the FDA in ways
that may significantly affect our business and our products. Any new
regulations or revisions, or reinterpretations of existing regulations, may
impose additional costs or lengthen the time for the review of our
product. Delays in the receipt of
regulatory approvals for our proposed product, or even the possible denial of
regulatory approval, would have a material adverse effect on our business,
financial condition and operating results.

11

We may be liable if we engage in the off-label promotion of our product. Our promotional
materials and training methods must comply with FDA and other applicable laws
and regulations, including the prohibition of the promotion of the off-label
use of our products. Healthcare providers may use our products off-label, since
the FDA does not regulate a physician’s choice of treatment within the practice
of medicine. However, if the FDA determines that our promotional or training
materials constitute promotion of an off-label use, we could be subject to
regulatory or enforcement actions, including the issuance of an untitled
letter, a warning letter, injunction, seizure, civil fine and criminal
penalties. In addition, other federal, state or foreign enforcement authorities
might act if they consider our promotional or training materials to constitute
promotion of an unapproved use. Such action could result in significant fines
or penalties. Although we would refrain from statements that could be
considered off-label promotion of our products, the FDA or another regulatory
agencies could disagree and conclude that we have engaged in off-label
promotion. In addition, the off-label use of our products may increase the risk
of product liability claims. Product liability claims are expensive to defend
and could result in substantial damage awards against us and harm our
reputation.

12

We face the risk of product liability claims and may not be able to
maintain or obtain appropriate insurance.
The
testing, manufacturing and marketing of medical devices inherently involves the
risk of product liability claims. Such
claims may also arise from the misuse or malfunction of, or design flaws in,
our product. We may be subject to product liability claims if our products
cause, or merely appear to have caused, an injury. Claims may be made by
patients, healthcare providers or others selling our products. Although we will
have product liability and clinical trial liability insurance that we believe will
mitigate appropriate levels of risk, this insurance is subject to deductibles
and coverage limitations. Our product liability insurance may not continue to be
available to us on acceptable terms, and, if available at all, the coverages
may not be adequate to protect us against any future product liability claims.
Further, if additional products are approved for marketing, we may seek
additional insurance coverage. If we are unable to obtain acceptable insurance,
or otherwise protect against potential product liability claims, we will be
exposed to significant liabilities.
These liabilities may harm our business. A product liability claim, with
respect to uninsured liabilities or for amounts in excess of insured
liabilities, could result in significant costs and significant harm to our
business.

We
may be subject to claims against us even if the apparent injury is due to the
actions of others or misuse of the product. Our customers, either on their own
or following the advice of their physicians, may use our product in a manner
not described in the product’s labeling and which differs from the manner in
which it was used in clinical studies and approved by the FDA. Such misuse could result in liability, which
could prevent or interfere with our product marketing efforts. The defense of a
suit, regardless of merit, could be costly, could divert management attention,
and could result in adverse publicity.
Such circumstances could result in the withdrawal of, or inability to
recruit, clinical trial volunteers or result in reduced acceptance of our
product in the market.

13

Failure to obtain regulatory approval in foreign jurisdictions will
prevent us from marketing our product abroad.
We
may seek to market the product in foreign jurisdictions. Outside the United States, we can market a
product only if we receive a marketing authorization and, in some cases,
pricing approval, from the appropriate regulatory authorities. The approval
procedure varies among countries and can involve additional testing, and the
time required to obtain approval may differ from the time required to obtain
FDA approval. The foreign regulatory approval process may include all of the
risks associated with obtaining FDA approval in
addition to other risks. We might
not obtain foreign regulatory approvals on a timely basis, if at all. Approval
by the FDA does not ensure approval by regulatory authorities in other
countries, and approval by one foreign regulatory authority does not ensure
approval by regulatory authorities in other foreign countries or by the FDA. We
have not taken any actions to obtain foreign regulatory approvals. We may not
be able to file for regulatory approvals and may not receive necessary
approvals to market our products in any jurisdiction outside the United States
on a timely basis, or at all.

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What people are saying

The senior author, Edward R. Damiano, an associate professor of biomechanical engineering at Boston University, has a 15-year-old son with Type 1 diabetes. He said he was determined to get the new device working and approved in time for his son to go off to college carrying one.

Notes from investors

In the news

An alarm sounds on Ed Damiano's night stand in the middle of the night. He jumps out of bed and rushes into his son's room next door. His son, David, has Type 1 diabetes. The 15-year-old sleeps hooked up to a monitor that sounds an alarm when his blood sugar gets too low.

Say hello to Beta Bionics, the new parent company that plans to commercialize the exciting iLet Bionic Pancreas system that administers both insulin and glucagon and was famously developed by researcher and diabetes dad Dr. Ed Damiano at Boston University.

The race is on for what may be the biggest innovation in decades for Type 1 diabetes management- the bionic pancreas -and on Friday, one of the lead researchers in the field announced at the Endocrine Society's annual meeting that he's launched a company to bring that invention to market.

By Adam Brown, Alexander Wolf, and Kelly Close Breaking news today from Boston, where Dr. Ed Damiano of the Bionic Pancreas team disclosed the launch of "Beta Bionics" - a new "public benefit corporation" to commercialize the team's fully integrated iLet Bionic Pancreas device to automate delivery of insulin and glucagon.

After years of research and trials, could the bionic pancreas finally be ready to hit the market? Diabetes is a perennial area of research in endocrinology, but scientists are now on the precipice of a new era of treatment options. To introduce some of the most revolutionary advances, the Presidential Plenary at ENDO 2016 in...

Children with type 1 diabetes assigned to a bihormonal bionic pancreas system for 5 days while attending a diabetes camp saw reduced plasma glucose concentrations, fewer hypoglycemic episodes and lower frequency of carbohydrate interventions than children assigned insulin pump therapy, according to research in The Lancet Diabetes &amp; Endocrinology.

Benefit corporation founded by parents of children with the disease Ed Damiano, the father of a 16-year-old boy with type 1 diabetes, has been racing for nearly 13 years to develop an artificial, or bionic, pancreas that could transform the lives of millions of people who have the same disease as his son, freeing them from the round-the-clock burden of managing a potentially life-threatening disorder themselves.

More than 29 million Americans have diabetes - it is the seventh leading cause of death in the U.S. In most cases, poor diet and lack of exercise are contributing factors to Type 2 diabetes, in which the pancreas doesn't use the hormone insulin properly.

NEWBURYPORT, Mass. (AP) - Like all parents, Constance Clarizia wants a short respite and sweet dreams at the end of the day. But for the past 14 years, nighttimes have not been sweet. With two sons who have Type 1, insulin-dependent diabetes, nighttimes have meant monitoring of blood sugar levels even while her children are sleeping.

Those with type 1 diabetes often say having the condition is like having a second job such is the stress of monitoring their blood sugar levels and administering doses of insulin. Now a group of researchers in the US say they have developed the first bionic pancreas that works in the real world enabling patients to lead a near normal life.

A portable artificial pancreas built with a modified iPhone successfully regulated blood sugar levels in a trial with people who have Type 1 diabetes, researchers reported Sunday. Type 1 diabetes, which usually starts in childhood or young adulthood, is a chronic condition in which the pancreas produces little or no insulin, the hormone that lowers blood sugar levels.

David Damiano would have died before his first birthday if it weren't for modern medicine. David received a diagnosis of type 1 diabetes at 11 months old. His pancreas stopped producing insulin, the hormone that regulates how much sugar is in our blood.

April 30, 2014
@ businessinsider.com

04

30

2014

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